Old Zhou
Abstract: Before his visit to China on April 26, US Secretary of State Antony Blinken expressed a tough attitude on many occasions and even threatened to kick Chinese banks out of the SWIFT system, which is called the "king bomb of financial warfare" or "the nuclear bomb of financial warfare".
Before his visit to China on April 26, US Secretary of State Antony Blinken expressed a tough attitude on many occasions and even threatened to kick Chinese banks out of the SWIFT system, which is called the "king bomb of financial warfare" or "the nuclear bomb of financial warfare".
SWIFT is the abbreviation of the English "Society for Worldwide Interbank Financial Telecommunications", which literally translates to the dismantling system of the Society for Worldwide Interbank Financial Telecommunications, often referred to as the International Funds Clearing System. The world's most dominant national financial settlement system is managed by the Society for Worldwide Interbank Financial Telecommunication.
After the end of World War II, the surge in international trade has also led to the increasingly frequent economic activities between the international banking industry, and the account transactions are also increasing day by day, and the traditional manual processing methods are increasingly unable to meet the needs, in order to adapt to the rapid development of the financial market, to achieve the rapid completion of transfer settlement and fund settlement in a country and even in the world. Therefore, in the late 1960s and early 1970s, seven European banks began to study the feasibility of processing procedures for the exchange of international financial messages under the plan to establish an international communication system to provide rapid transmission services of international financial data and other information. The results of the study suggest that an international financial transfer system should be established that can achieve accurate, secure, low-cost and rapid transmission standards, as well as an international financial processing system.
In May 1973, a total of 239 banks in 15 countries in the United States, Canada and Europe announced the formal establishment of the SWIFT system, headquartered in Brussels, the capital of Belgium.
In 1974, he began to design the computer network system, and in the summer of 1977, he completed the construction and development of the SWIFT network system, and officially put it into operation.
Since the creation of the SWIFT system, the number of banks participating in the system has increased rapidly. Since 1987, non-bank financial institutions, including brokers, investment companies, securities companies and stock exchanges, have also begun to join the SWIFT system. Today, SWIFT has more than 8,000 members in 206 countries and territories around the world.
In 1985, Bank of China joined SWIFT and became the 1,034th member bank of the SWIFT organization, making it the first bank in China to join the SWIFT system. Subsequently, China's major state-owned commercial banks, overseas Chinese banks, local banks, and stock exchanges in Shanghai and Shenzhen have also joined SWIFT.
Although the SWIFT system was first proposed and established by European banks, it was led by the United States. This is because of the "Bretton Woods system" that began in 1944, where the dollar was pegged to gold, and $35 was exchanged for 1 ounce of gold. Although the United States announced the decoupling of the dollar and gold in 1971, the dollar and gold were pegged in the past 30 years, making the dollar have the nickname of the dollar and have a fairly high reputation. More importantly, the U.S. dollar is the most important international settlement currency for global trade, especially oil trade, which is basically settled in U.S. dollars. This establishes the pre-eminent position of the dollar in international trade and international finance. Moreover, the data center of the SWIFT system is located in the United States and is governed by American law.
There have been two precedents in history for a country's banks to be kicked out of the SWIFT system. In 2012, the United States and Western countries imposed economic sanctions on Iran, and four of Iran's most important banks were kicked out of the SWIFT system, which had a huge impact on Iran's economy.
In 2023, due to the Russia-Ukraine war and Western economic sanctions against Russia, a number of major Russian banks were kicked out of the SWIFT system, which also dealt a heavy blow to the Russian economy, with GDP falling by nearly 10% that year.
For China, as early as 2019, that is, at the peak of the Sino-US trade war, there were voices in the United States to kick Chinese banks out of the SWIFT system, but in the end it was just talk. But this time it seems to be a bit of a real thing, and many heavyweights in Wall Street financial circles are talking about how to deal with Chinese banks if they are kicked out of SWIFT. Therefore, it is also considered to be the most powerful killer move brought by Blinken.
So, this trick is called the "king bomb of financial warfare" or "the nuclear bomb of financial warfare", once it explodes, what impact will it have on us?
First of all, for the impact on banks, since the SWIFT system is a payment and settlement system between banks, banks are the first to bear the brunt. At present, the international settlement business of banks basically accounts for about 30% of the total business volume of banks, and some banks are even higher. Once kicked out of SWIFT, the blow to the bank will be very heavy, and if the sanctions continue for several years, the bank is likely to be disabled. There have been several examples like this before, and basically the banks that have been sanctioned by this sanction have only survived, if not failed.
Secondly, it is a huge blow to the foreign trade industry. Kicking out of the SWIFT system, it is impossible to settle with overseas customers, just like how to conduct online shopping without Alipay?
This is quite a serious problem, but there are two voices on the Internet that are still very popular recently.
The first is that the United States does not dare to kick us out of the SWIFT system, because we are the world's second largest economy, with a total import and export volume of 41.76 trillion yuan (about 5.97 trillion U.S. dollars) in 2023, of which 23.77 trillion yuan (about 3.4 trillion U.S. dollars) will be exported and 17.99 trillion yuan (about 2.57 trillion U.S. dollars) will be imported. However, you must know that as the old saying goes, "be lenient with the enemy", and there is a cloud in "The Art of War: Nine Changes": "If you don't come, you will wait for it; It means not to hope that the enemy will not attack, but to rely on yourself to have the means that the enemy cannot attack.
In reality, a living example is that after the outbreak of the Russian-Ukrainian war in February 2022, 90% of Europe's natural gas supply came from Russia, so Russia thought that this was a trump card enough to restrain Europe, but in the end Europe completely decoupled from Russian gas. Similarly, although we are the world's factory, if the West decides to decouple, the prices of various commodities may initially rise by 5% or more. But when the West finds alternative producers, prices will fall back quickly (as in the winter of 2023 the price of natural gas in Europe fell sharply). What the West loses is only the shock of short-term price increases, and we will lose the market for digesting products forever. And now the West is already gradually decoupling, which will only speed up the decoupling. There is no suspense as to who will lose more or heavier in the end.
The second is that we are not afraid, and it is a big deal that we will establish a new international settlement system based on the renminbi ourselves. There is no difficulty in establishing such a system with the current cluster means. But the key is that how many countries and banks will join such a settlement system? If there are no countries and banks to join, no matter how technically good the settlement system is, it will be meaningless.
Even Iran and Russia, which have been kicked out of the SWIFT system, will be willing to use RMB to settle trade with us?
Of course, it cannot be denied that the West will suffer considerable economic losses in the initial stage by kicking Chinese banks out of the SWIFT system, but if the West is determined to bear this loss, then it will be difficult for us to have a bargaining chip to compete with it.
This is the reason why kicking out the SWIFT system is regarded as the "king bomb of financial warfare" or "nuclear bomb of financial warfare".
Are we ready for this nuclear-bombed bomb?
(The picture in this article comes from the Internet)
Lao Zhou, whose real name is Zhou Ming, once used the screen name Guangting, has been engaged in the study of military war history for a long time, and has served as a guest on military columns on Phoenix Satellite TV and Shanghai TV many times. He has published more than 20 military books, which can be consulted and purchased on the micro-store "Zhibingtang Bookstore" and a treasure online store "Zhibingtang Bookstore". Now there is a personal column "Lao Zhou Military" on Himalaya, which produces military audio programs. The "Old Zhou New Observation" video account has been set up on major video platforms to interpret military hot spots, please support.